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I wish this was around when I was 23…

…”Venture for America“.

 

 

“The FSOC’s decision to expand the too-big-to-fail designation to nonbank firms will be seen as the most damaging action taken under Dodd-Frank”

Instead of going away, “Too Big To Fail” is expanding:

 

It was no surprise that the Financial Stability Oversight Council (FSOC) decided last week to cite a number of nonbank firms as systemically significant, placing them in line for greater regulatory scrutiny by the Federal Reserve. What was a surprise is that — in the midst of a huge outcry in Congress about banks that are too big to fail (TBTF) — neither Congress nor the administration asked the FSOC to stop the designation process until the too-big-to-fail issue had been fully thought through. After all, by designating some nonbanks firms as TBTF — GE Capital, AIG, and Prudential Insurance are in the group — the FSOC has created a whole new set of institutions that will now be considered TBTF. [via The American]

 

America move from entrepreneurial capitalism to state crony capitalism continues step-by-step.

IMO, companies that are “too-big-to-fail” need to be broken up.

 

 

Brain Dump: Triple Entry Accounting?

Has anybody else heard about Triple Entry Accounting? I have four references: here, here, here, and here.

 

Would this really be an pro-transparency and anti-fraud control? Any accountants out there? This is outside my expertise.

 

 

Instead of non-high speed taxpayer-subsidized “high-speed rail…

…how about privately owned and operated luxury bus lines?

 

 

Travel by intercity bus is growing at an extraordinary pace: reflecting a rise in travel demand, escalating fuel prices, and investments in new routes. This confluence of factors has propelled scheduled bus service between cities to its highest level in years and has made the intercity bus the country’s fastest growing mode of transportation for the third year in the row.  “Curbside operators,” including BoltBus, DC2NY Bus, and Megabus.com, which eschew traditional stations in favor of curbside pickup and provide customers access to WiFi and other amenities, have enjoyed particular success.

The comeback of the intercity bus is noteworthy for the fact that it is taking place without government subsidies or as a result of efforts by planning agencies to promote energy efficient forms of transportation.  Instead, it is a market-driven phenomenon that is gradually winning back demographic groups that would have scarcely contemplated setting foot on an intercity bus only a few years ago. Our DePaul University study estimates that curbside operators like Megabus expanded the number of daily departures by 23.9% last year.   In the Northeast and Mid-Atlantic states, service grew at an even faster rate.[Link]

Anti-Spam Lawfare

It sounds like some Computer Scientists…

A team of computer scientists at two University of California campuses has been looking deeply into the nature of spam, and they think found a ‘choke point’ [PDF] that could greatly reduce the flow of spam…If a handful of companies like these refused to authorize online credit card payments to the merchants, ‘you’d cut off the money that supports the entire spam enterprise,’ said one of the scientists. [Link]

…has caught up to my thinking…

Often much of the cost of an information security incident falls not onto the party that is responsible for providing the Security but onto third parties. While the enterprise/individual that has the incident may incur costs, much of the cost of this InfoSec externality is put onto others (organizations/individuals/taxpayers).

What is lacking is proper incentives. By incentives I do not mean government regulations or criminal statutes.

I mean money. Getting money is a good incentive. Avoiding loosing money is a good incentive. Not having your Balance Sheet, Income Statement, and Cash Flow Statement be effected by information security loss is a good incentive.

What is needed is Information Security Lawfare.

If an organization or individual deploys information technology in such a way that normal best practices are not followed (read: Duty of Care) and is subsequently used as part of an information security incident, those effected by that information Security incident should sue for a Tort Remedy.[link]

Why leave Lawfare just to the bad guys?

“Douchebag spreadsheet manipulation is not in high demand right now…”

There is an interesting discussion of the merits/value of an MBA at Business Insider.

As a MBA holder, there is much I regret about the time and effort that went into it. The cost was partially on me, partially on my employers. I had already devoured my company’s business library and was reading/practicing other stuff myself. About 1/3 of the program has been not useful. The rest of the program gave me a broader set of business/management skill and tools which has made me more valuable. I wonder if I had a business minor as an undergraduate, if that would have been better. I imagine an MBA on my resume was a better signal then a business minor. I bet a PMP certification would have been just as good though.

FYI: The snip in the subject is from commenter “getta life”.

One Way Investment Banks looted their customer: The IPO Process

I am just capturing my comment at TDAXP:

One area in which Investment Bankers did great harm to the US Economy was in the area of handling IPOs.

Investment Bankers essentially used the process as a means of looting wealth from the entrepreneurial firms going public for the benefit of the investment bank and some its choice customers to the detriment of the Entrepreneurial Company and its founder/owners.

While I don’t know if the process started out that way, by the time of the internet boom in the mid 1990’s it was.

Here is how the looting worked.

ACME Systems is a growing Network Service Provider. The founder and the VCs decide to take the company public in order to raise cash for growth for company, to reward the founders and reward/payback the early investors and VCs.

ACME Systems hires investment bank Natas, Laab & Ikol (NLI) to help with this. ACME will pay NLI to 1) Value the company and 2) Manage the Public Offering.

NLI will get a shitload of money for this.

Preparing for the IPO, NLI determines that the ACME public offering will be 10 million shares at $20/share valuing ACME at $200 million. The source of the shares will be from the founders (some of their shares), the early investors (some of their shares),  but mostly the shares will be new shares with purpose of raising money for the company to further grow (and become profitable or more profitable.

So, IPO day occurs and lo and behold the stock price jumps up to $27/share. The business journalist and shareholder are giddy at the day one bump. By the end of the week the price is $32/share. The company is now valued at $320 million and market value increase of $120million.

This IPO day scenario happened again and again.

So, everybody was happy right? It is a good thing that the stock price jumped up so high on day one,right?

The answer is no. The founders, initial investors and the company just got looted NLI.

Besides the large pile of cash paid to NLI for their “expertise” in handling IPO, they also bought shares at that opening price and let choice customers of theirs (favorite insiders) all by shares at that opening price.

Rarely did the stock price drop after IPO day. It almost always rose. This suggests that through malice, NLI purposefully recommended an IPO price/share that undervalued the company. The $120million rise in market price – that wealth should have gone to the founders, early investors, and the cash accounts of ACME. The $120 million that should be in ACME bank accounts for growth and job creation has instead mostly ended up in the bank accounts of NLI and its favored customers.

NLI did nothing to “earn” this extra wealth. Remember, they were paid big time to manage the IPO and value the company. This extra wealth is money they looted by manipulating the process. How many companies with good ideas and products would have survived if they had more of the they should have had in order to get their product or service offering up and running? How many jobs would that have been? How much has lost by these companies not surviving because NLI pilfered from them?

I am glad NLI and real-world banks like them are going or gone. Fuck them. They are not needed anymore. Maybe in the old days, there was no other way to do IPOs. That is no longer true.

The right way to do IPOs is through an Open Auction [1] after a set time period by which firms and individuals can use their individuals skills to determine an appropriate share price. Using this Wisdom-of-the-Crowds approach a good share price can be derived and the IPO can do what it is meant to do: raise cash for the company by selling a percentage of the company at a fair price.

[1] http://www.wrhambrecht.com/ind/auctions/openipo/index.html

Protectionism Rising?

I am troubled by the by the anti-free trade signals being made by USGOV toward Mexico as documented by TDAXP.

I think the default view of many Americans (maybe all humans) is that of protectionism. I think our brains evolved in a zero-sum economic world, and while we are still evolving this is still la hard concept to shake.

I think this is demonstrated by the rising interest in so-called local currencies which I think is just another expression of a default protectionist PoV.

Washington Math Sucks: $30,000 (On the Bailout)

$275 Billion / 9 million = $30,000 (rounded down)

I am a sucker. Partially I rent becuase I didn’t buy becuase I didn’t want to buy into a bubble.

$30k is essentially being given to those that bought houses they couldn’t afford with the money taken from those who did not behave that way.

WTF is going on with the USA?

Let housing prices drop.

Let the homes be foreclosed on.

Let the banks go under.

Say no to Lemon Socialism. Say no to a new liberal fascism.

Death to zombies.


Death to Zombies

The PurpleStimulus or Let Banks Fail…but fast and other goodies (“On The Bailout” Series)

This started out as a comment at TDAXP [1].

Here is what the USAGOV should do (not what they plan to do [2]) – and it should be done quickly and without mercy:

1) Have Bank regulators set the appropriate capitalization level for the bank

2) Assuming level not met, declare bank insolvent.

3) Wipe the shareholders (common and preferred) equity out.

4) Wipe out a significant amount of the long term debt (at least 50%)

5) Convert the rest of the debt to “equity”.

6) Fire the Board. Fire the Executive Leadership team. Fire the Auditors.

7) Hold an Open Auction for Preferred Stock and Common Stock to get capital infusions.

8 ) If the appropriate capitalization level set by regulators is not reached, USAGOV also makes an investment as either as a secured loan or as a purchase of prefered stock (plus warrants) at an above market coupon rate (say 1.5 X market rate) to reach that level while also transferring all of the “toxic  assets” to a USAGOV fund that maybe the Taxpayers can get something back someday.

9) The executives, boards and auditors should be investigated for fiduciary misconduct and civil litigation undertaken by US Attorneys to recover cost and looted wealth on behalf of the old shareholders.

Primary End Result: A working publicly-tradeable bank with an appropriate level of capitalization that is without “toxic assets”.

Secondary End Result: Taxpayers/USGOV may collect some money eventually from the Toxic Assets.

Note 1: USGOV should create closed-end mutual funds to sell off pools of the Preferred Stock to recover USGOV upfront outlays [3] and lessen USGOV temptations to interfere with those banks.

Note 2: I don’t have any “rescue” for Mortgage holders. Let the mortgages fail, and don’t prop up housing prices. This needs to correct.

Note 3: I don’t have any “rescue” for long failing companies. Let them die. Let Creative Destruction take place. Don’t feed the zombies.
http://www.wisegeek.com/in-business-what-is-a-zombie.htm

Note 4: The only stimulus I am interested in [4] is something along the lines of:

(a) Create Incentives for Businesses to Make Capital Investments by allowing 100% immediate depreciation
(b) Cleanup and rebuild America’s National Parks – and the state and local parks too.
(c) Finish the Yakima Nuclear Waste project
(d) Clean Up the Brownfields and toxic dumping grounds
(e) Start planning and constructing a national network of Smart Power Grids
(f) Install Municpal Plasma Furnaces [5] [6] across the country to create energy and elimnate landfill trash dumps.
(g) Pick a single “Wow” project.

Note 5: I would be okay with just (a), (e) and (f) from above.

Note 6: On that too-big-to-fail crap. Any enterprise that is “too big to fail” should have anti-trust action taken against it by USGOV/DOJ to break it up rapidly. [7]

Note 7: The currently regulatory alphabet soup is a failure. SOX is a failure. They should be replaced with something. I will leave that something for now to Future Purpleslog.

If USGOV tries to lessen this, they will just stretch it out and make it worse. Nor will the Political class be able to avoid giving rewards, favors, and protection to allies. They just can’t help themselves.

Update – Note 8: USGOV should fast any regualtory red tape for those startup up brand new banks from scratch.

[1]
http://www.tdaxp.com/archive/2009/02/11/what-is-the-difference-between-sirius-and-citi.html/comment-page-1#comment-239335

[2]
http://hotair.com/archives/2009/02/11/the-only-man-for-the-job-lays-an-egg-on-wall-street/

[3]
https://purpleslog.wordpress.com/2008/11/16/monetize-the-tarp-on-the-bailout-part-27

[4]
https://purpleslog.wordpress.com/2008/11/28/a-better-stimulus-plan-on-the-bailout-32/

[5]
https://purpleslog.wordpress.com/2008/06/23/a-tech-based-energy-idea-tha-i-like-municipal-plasma-furnaces/

[6]
https://purpleslog.wordpress.com/2008/11/13/energy-entrepreneurship-plasma-gasification-of-trash/

[7]
https://purpleslog.wordpress.com/2008/11/24/public-policy-guidance-on-too-big-to-fail-on-the-bailout-part-28/

“Malcolm Gladwell: What we can learn from spaghetti sauce”

I have been running through all of the old Ted Talks via my iPod. It was a joy to hear this one again: “Malcolm Gladwell: What we can learn from spaghetti sauce”.

Here is the video version from youtube:

I am being abused by Verizon mentally

Verizon, you suck.

I am on-hold right now with the Verizon Business technical support super secret escalation number.

I am being abused by their on-hold music.

It is playing a disco/techno instrumental version of Stairway to Heaven.

Why would a business do this? Do they want their customers to hate them more?

By the time I am brought off hold, I will be pissed off and ready to fly off the handle at the Verizon guy for abusing my ears and not just becuase they have not been able to fix service (for 7+ days) to one of my remote sites.


I like to think he is singing “Verizon, you can suck my…”

Creative Destruction Example in Milwaukee

The local Schwartz’s bookseller chain just died (it couldn’t compete with B&N in the fleshspace, or Amazon.com in cyberspace), but its 800-CEO-READ:

At a time when independent, bricks-and-mortar general bookstores all over are closing, 800-CEO-READ is an independent that’s thriving. With just 15 employees and 3,000 square feet in a renovated office building in the Third Ward, it has not only successfully held its own against Internet and large-chain booksellers but has also carved a spot for itself as one of the nation’s premier sellers and arbiters of what is best in business literature.

Today it further secures its reputation as the tastemaker. Covert, the founder and chief mentor of 800-CEO-READ, and Todd Sattersten, the company’s new president, are coming out with their first book, “The 100 Best Business Books of All Time: What They Say, Why They Matter, and How They Can Help You” ($25.95).

I used to go to Schwartz’s all the time. It wasn’t as good a the University Bookstore, but it was some much better then the old bookseller chains. Then I discovered Borders (I would drive to Madison) and Barnes & Noble (I would go down to Chicago), and the wonderfully online Amazon.com.

Capitalism‘s Creative Destruction works. We are all better for it. Death to Zombies.

Is VisiCalc responsible for the Current Finacial Crisis? (“On the Bailout” Series)

John C. Dvorak thinks so. He makes an interesting case.

Misleading Headline on the Madoff scandal that I wish was true

The US case for radical energy use efficiency and for switching to alternative energy sources

I have been looking to blog on this for sometime, but it came out in a comment at TDAXP:

The best case for the US to move to radical energy use efficiency and to switch a lot more to alternative energy (while sharing or selling the techniques and technology to the rest of the world to use as well) is that it will reduce the economic power and freedom of action of lots of bad actors in the world who tend to work against the interest of the US and other democratically inclined actors.

To be clear: I am not a green, I am not a watermelon. I have not been sucked into the faux-science quasi-religion of Global Warming. I don’t secretly want to de-industrialize the west. I do not advocate lower growth or less industry.

I want to drive an affordable electric or gas/electric or some sort of flex-fuel vehicle as a mobility device. I want to take a train once a month to Madison or the Fox River Valley. I want to see a new nationwide network of smart electrical grids powered by small scale nuclear plants, municipal plasma furnaces, wind and solar (where the make sense) or whatever else entrepreneurs can dream up and successively execute. I long for the day of orbital solar power.

I love the idea of (and the change it will make) of Russia and Saudi Arabia and the others of their ilk being deprived of their ability to make mischief  and misery for the rest of the world. I welcome their fall. This will be a good thing for the world.

I want the science fiction future promised to me as a kid, and I want it shared with the world.


One day…

Kohl’s caught screwing with its customers…

here.

It only takes little actions like this that become widely known to destroy consumer confidence in a store chain, in a brand. Consumer can and will vote with there and take there money elsewhere.

If this is an isolated issue, Kohl’s should very publicly fire the management of that store.

If it is not isolated, that is, if it turns out to chain-wide, the board needs to dump the top execs publicly before this turns into a long-term profit-busting fiasco.

Entrepreneurship News: “NASA Outsources ISS Resupply To SpaceX, Orbital”

This is great news (from SlashDot):

“NASA has signed two contracts with US commercial space ventures totaling $3.5 billion for resupply of the International Space Station. SpaceX will receive $1.6 billion for 12 flights of SpaceX’s planned Dragon spacecraft and their Falcon 9 boosters. $1.9 billion goes to Orbital for eight flights of its Cygnus spacecraft riding its Taurus 2 boosters. Neither of the specified craft has ever flown. However, the proposed vehicles are under construction and based on proven technology, whereas NASA has often contracted with big aerospace companies for services using vehicles not yet even designed.”

NASA should relinquish low-earth orbit and re-supply, and concentrate efforts on more exploration of the Moon, Mars and the Solar System. I think an anti-death-to-all-life-on-earth-asteroid system would be a good thing too. This will make for a better overall utilization of Space by the US for science, profit, and fun.

GM Death Wish

Found on Instapundit:

VOLT ENGINE PLANT ON HOLD: “Word is that GM has shut down construction because it doesn’t have the cash to pay for steel structural members.” Ouch.

At The Truth About Cars link:

The new Flint, Michigan engine plant slated to build the ICE for the Chevrolet Volt has been put into deep freeze. AP (via Yahoo) has this latest tale of woe. Word is that GM has shut down construction because it doesn’t have the cash to pay for steel structural members.
[…]
Only four short months ago GM said it would spend $370 million building the new engine plant, and scored $132.5 million in Michigan tax incentives for its efforts.

If this vehicle is really GMs future, building the facility should be the most (or really close to it) important activity at the company.

I think GM’s inept executives and managers and short-sighted employers have a death wish.

Please, no bailout for GM.

Chapter 11 is the way to go. Wipe out the stockholders. Clean out the execs. Break the union. Toss the dealer contracts.

A smaller, different GM maybe be able to survive.

The “I am too Lazy/Busy to post” Open Thread & Linkspasm

I have been both too busy at work to post or read much and also too tired/lazy in the evenings to post, so here are a bunch of issues that might interesting. I will make updates in the comments.

I will engage in comments here and elsewhere, but I most likely won’t post much if anything the rest of the week.

Anyways, here we go:

National Security / Global Security

Positive side-effect from the US involvement in Iraq: “A top Iraqi official is calling for the formation of a regional economic security union to share water, energy and other resources, and mediate disputes among its members.”

Newspeak example: Ayers and the Weathermen were not doing terrorism, they were doing “extreme vandalism”.

The Greek Youth Riots: Leftists, not Muslims.

Military Theory vs. Philosophy: “My point is that real benefit comes from focusing on real and testable change, not extravagant theories on the nature of warfare. An example of a testable hypothesis would be that direct and accurate portable HE projection could replace MG in the primary infantry support role. Best platform would be the XM-109 payload rifle with air-fuzed and HEAP rounds. This could be tested through computer simulation, modeling, field testing and historical review etc etc. While all those methods have there weaknesses and biases, they provide more feedback then is achievable is from the “nature of warfare” theories, so why are focusing on these non-productive concepts of 4GW and EBO etc. to define how we fight COIN?”

Michael Yon on Afghanistan: “But Afghanistan is a different story. I write these words from Kandahar, in the south. This war here is just getting started. Likely we will see severe fighting kicking off by about April of 2009. Iraq is on the mend, but victory in Afghanistan is very much in question.”. His blog should be in your RSS feed.

Cyberwar? “The report calls for the creation of a Center for Cybersecurity Operations that would act as a new regulator of computer security in both the public and private sector. Active policing of government and corporate networks would include new rules and a “red team” to test computers for vulnerabilities now being exploited with increasing sophistication and frequency by identity and credit card thieves, bank fraudsters, crime rings, and electronic spies. “We’re playing a giant game of chess now and we’re losing badly,” says commission member Tom Kellermann, a former World Bank security official who now is vice-president of Security Awareness at Core Security.”. This should be a big money hole. I think the threat is overblown (and I am a IT Security guy). The real problem is that the approaches to information security at the Macro level seem pretty immature and need to be rethought. That is where the money should be spent.

– …and yet: “They propose that botnets should be designated as ‘eWMDs’ — electronic weapons of mass destruction.”

– Podcast to Listen to: Covert Radio


Economics & “On The Bailout”

– [Forbes] Makes the case to cut taxes across the board instead of increasing Government  spending. Here was my “stimulus” idea. So does Human Events.

– The interference into Bank business by politicians has begun.

Heh: “Practically speaking, however, public works involve long start-up lags. Large-scale construction projects of any type require years of planning and preparation. Even those that are “on the shelf” generally cannot be undertaken quickly enough to provide timely stimulus to the economy” and “Some of the candidates for public works, such as grant-funded initiatives to develop alternative energy sources, are totally impractical for countercyclical policy, regardless of whatever other merits they may have. In general, many if not most of these projects could end up making the economic situation worse because they would stimulate the economy at the time that expansion was already well under way.” Check out who said that.

Oops: “These finding are not consistent with standard Keynesian theory”

Amity Shales: “The idea is to revive the economy and create jobs for America’s unemployed. But huge public works projects often fail to revive national economies. Consider the example of Japan in the 1990s.”

– BTW, Real Clear Markets is a nice roundup web page.

Dissing (rightfully) Macroeconomics

– “One new reality is the imperative that our government modernize America’s aging energy, water and transportation infrastructure.

Also: “It’s important that the elected officials view public works investment not as a short-term stimulus for stimulus’ stake, or a vehicle for politically driven job creation. The goal should be to create the best and broadest necessary and permanent infrastructure for the most responsible minimal price needed to build it. Being careful here is necessary because this is borrowed, finite money; it could become prohibitively expensive for the feds to borrow as debt levels skyrocket. Spending is not investing.” and “Similarly, funding regular maintenance work that states and cities should pay for isn’t a wise investment. Federal money should pay for replacing obsolete assets and making well-thought-out improvements.”

Blamestorming the Crisis: “Free markets did not bring the world’s financial system to the edge of collapse. Rather, the epicenter of the crisis was a massive dose of state capitalism. By state capitalism, I mean that the state, in this case the federal government, used its vast powers to intervene in, and distort capital markets in a manner that led directly to the creation of trillions of dollars in bad loans. Moreover, in the pursuit of a social policy to increase affordable housing and home ownership, the federal government engaged in policies that disrupted the financial market’s ability to be self-regulating; that is to attenuate if not avoid the crisis we are in.”

– “Buffet U

– I am not surprised: “Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said Monday.” […] Dugan said recent data showed that after three months, nearly 36% of borrowers who received restructured mortgages in the first quarter re-defaulted.

– Podcast to listen to: Econtalk and Planet Money

Detroit and the Auto Industry

Truth to power:  “GM, Chrysler, and Ford are failing in part because of their foolish attempts to manipulate the government into protecting them from the market”

 – The (first) Detroit handout bailout will be $15billion. Morning Joe (a pretty good morning news show) was saying that the House Speaker didn’t want anybody with business experience to be the Car Czar. Also, no chapter 11 for GM.

– FYI…that $70/hr figure for UAW workers is just current workers. Retirees cost are above that.

Chrysler should open its books: “Chrysler LLC says it’s almost broke and needs federal aid to survive. Perhaps that’s true. Yet taxpayers should be asking: How do we know? Sure, we can surmise from all the awful vehicles Chrysler makes that it’s losing mountains of dough. Really, though, we have no idea. We don’t even know who sits on the company’s board of directors. That’s because Chrysler and its owner, Cerberus Capital Management LP, won’t disclose the information”. I suggested this sometime back.

Milwaukee and “Fixing Milwaukee”

– The City can’t even do the basics right: “Up to $780 million more needed to fix worst residential roads“:

The audit from Comptroller W. Martin “Wally” Morics’ office found that 214 miles of residential streets, or nearly 21% of the total, were in the worst shape, as measured by a city Department of Public Works scale.

Auditors also found that the department is taking an average of 106 years to repave or replace local streets as of this year. That’s down from the 2005 peak of 163 years, but it’s still more than twice the streets’ expected lifespan.

To deal with the problem, auditors recommended shifting from a policy of working on the worst streets first to a strategy of keeping the best streets in good shape while catching up on the backlog of poor streets.

Retro Milwaukee

– The County Board chair wants to forgive the debt a do-gooder organization and let them be a county contractor again.

Entrepaunership Stuff

– “Bathroom for Rent

– Podcast to checkout: Struggling Entrepreneur

Science, Technology and Gadgets

Bad news for future Potential Space Elevator: “n a report on NewScientist.com, researchers working on development of a space elevator (an idea we have discussed numerous times) have determined that the concept is not stable.”

– “The 10 big energy Myths

“Ten ways the world could end”

Tech Dirt has Doug Engelbart’s 1968 demo. “That demo was the first time the world saw an awful lot of things that are common today: from the mouse (and, yes, he talks about naming the mouse), to a graphical user interface, to hyperlinks, among many other things (including a few computer bugs).”

– Podcast to check out: Talk of the Nation’s Science Friday.

Pop Culture

– Podcast to check out: All Songs Considered

Other / General

The Chicago Way! How disgusting.

Hmmm: “Joe Wurzelbacher says he felt “dirty” after “seeing some of the things that take place” on the campaign trail.” It is not fun to see how sausgage is made.

More evidence the Football Playing skill and Gun Safety are negatively correlated (sample size=2): “Mississippi Football Star Shoots Self During Traffic Stop”

Please add your thoughts and links in the comments.

WTF: “Jay Leno is staying at NBC, will be in prime-time”

Huh?

Jay Leno is staying at NBC, and he’s moving to prime time. The network announced on the “Today” show Tuesday that Leno will host a show on weeknights at 10 p.m. Eastern, after he leaves the “Tonight” show.
[…]
The deal not only prevents Leno from moving to another network and competing with O’Brien, it also has the potential to be a big cost savings for NBC.

Dramas at 10 p.m. Eastern used to be a mainstay of network schedules, but they have been fading — particularly on NBC.

Does NBC really think the problem with its schedule is that it doesn’t have enough shows with tired monologues celebrity interviews?

So, another 5 hours of potentially good prime-time dramas will disappear from broadcast TV, to be replaced with the stale and predicable. This should drive more viewers to alternatives.

Sometimes, I don’t think businesses really want to survive – and I say this as a GE shareholder.

Cringley on the Failure in Detroit: “It’s the cars, stupid”

He writes:

My hobby is building small airplanes and one of my favorites is a Davis DA-2A, winner of the Outstanding New Design contest in 1966, the same year my Oldsmobile (and my current Thunderbird convertible) was built. That little Davis can teach us a lot about cars.

I didn’t build my DA-2A, but I am rebuilding it right now and know it intimately. My Davis is an all-aluminum two-seater with an 85-horsepower engine. The engine was built in 1946, the plane in 1982, and the whole thing cost under $4,000 at the time, though today I have more than that invested in the instrument panel alone. The plane weighs 625 lbs. empty, 1125 lbs. loaded, has a top speed of 140 miles per hour and can travel about 600 miles on its 24-gallon fuel tank.

Why can’t I buy a car like that?

Imagine if we took the basic design parameters of my DA-2A and applied them to a modern automobile. The new design would have to carry two people and luggage, have an empty weight of no more than 625 lbs. and use an 85-horsepower engine. With a loaded weight of 1125 lbs., the car would have a power-to-weight ratio comparable to a Chevy Corvette and be just as quick — probably even faster than the airplane’s 140 mph. Driven only 20 percent over posted speed limits as God intended, the car would easily get 50+ miles per gallon.

Who wouldn’t want to buy one?

Sounds promising…and different then the Detroit approach.

Here’s the kicker:

Bicycles are different. Bicycle buyers, whether they are conscious of their behavior or not, try to pay the MOST per pound rather than the least. A lighter bike is always a better bike and a more expensive bike. Cheap bikes from Wal-Mart tend to cost about $2 per pound, nice bikes from a bike shop cost about $20 per pound, and top-of-the-line racing bikes cost about $200 per pound which, interestingly, is about the same per-pound cost as a top-of-the-line Ferrari or Aston-Martin.

So the trick to turning around the U.S. auto industry is to make car buyers adopt the values of bicycle buyers, which implies the willingness to pay $20 per pound of final product. The way to achieve that goal is by building cars that are both affordable at $20 per pound and EXCITING TO DRIVE.

Under this formula, the car version of my DA-2A would cost $12,500, making it broadly affordable. Yet with 6061 aluminum alloy selling in volume for around $1.60 per pound, there ought to be plenty of profit in there for the companies.

Detroit doesn’t understand that.

No free-ish bailout of the Detroit 3 will makes the executives smarter and make them designand produce better cars.

They need chapter 11 and a heavy hand.


I think this is a DA-2A

The Folly Of USGOV Stimulus packages and Keynesian Economic Theory: (On the Bailout, Part 31)

Stimuluses (Stimuli?)  don’t work from an economics PoV.

As blogged here, it may sounds good…

An economist named John Maynard Keynes argued that the economy could be boosted if the government borrowed money and spent it. According to this Keynesian approach, this new spending would put money in people’s pockets, and the recipients of the funds would then spend the money. This would, according to the theory, “prime the pump” as the money began circulating through the economy. The Keynesians also said that some tax cuts — particularly lump-sum rebates — could have the same impact since the purpose is to have the government borrow and somehow put the money in the hands of people who will spend it.

…but it has a flaw:

It overlooks the fact that, in the real world, government can’t inject money into the economy without first taking money out of the economy. Put more bluntly, Keynesianism only looks at one-half of the equation. It conveniently ignores the fact that any money that the government puts in the economy’s right pocket is money that is first removed from the economy’s left pocket. As such, there is no increase in what Keynesians refer to as aggregate demand. The bottom line is that Keynesianism doesn’t boost national income, it merely redistributes it.

Economics is hard to understand and is poorly taught in the US. The Macro-Economist oversell it predictive and proscriptive qualities. It should be no surprise therefore that junk economics is consider public policy “common sense”.

Update: Here’s question: Is there a non-economic effect of a Stimulus Package that can lead to a positive economic outcome (keeping opportunity costs in mind)?


John Maynard Keynes

“The Credit Card Bailout” and the failure of Business/USGOV Leaders (On the Bailout, Part 30)

TDAXP covers it all:

What is disturbing about our President, and our even worse Congress, is that we are throwing good money after bad in a way that is not only wasteful, but also foolish.

The purpose of the credit card bailout is obviously to increase spending. The credit card bailout does so by socializing the losses that individuals and banks have taken because people bought things they could not afford, while allowing the individuals to keep those toys and the bansk to keep collecting interest payments.

Without the credit card bailout, less bad offers would be made, and more people would forced into bankruptcy by institutions desperate to get whatver cash back is possible, as soon as possible.

However, instead of rewarding bad behavior, this money can be spent on ways that will help our country and our world.

It is clear to me, that we are witnessing an incredible failure of leadership at the Business and USGOV level.

Furthermore, the undermining of the American system of Democratic Capitalism – the obvious lack of support/understanding of that system –  by Business and USGOV leaders will continue to have non-trivial short-term and long-term negative effects.

Stimulus Package: “spending in the range of $500 billion to $700 billion”

Jeez.

I predict every Democrat special interest will come out for their payoff handout.

Most of this spending will crowd out other spending and investment. Capital Investors will be more likely to sit out given the uncertainty of USGOV actions.

I laugh (sadly) when I hear politician talk about the jobs they will create. These will not be viable jobs. They will only exists because taxes are sucked from the viable jobs to pay for these news jobs (and the bureaucrats to manage them).

One thing you hear is that people will be put back to work building or rebuilding schools. That should help fuck up US education for another 50 years. US taxpayers provide plenty of money per student. The problem is that way too much of the capital of the public schools is tied up in their facilities and the management of their facilities (and management/bureaucratic overhead). Throwing more money at school facilities will keep the American K12 stuck were they are. It will do nothing to improve math and/or science education. It will do nothing to improve reading. It will do nothing advance the American K12 system to a 21st century system.