what? in florida?

There’s a coffee place in Arlington, Murky, that we used to frequent often but they’ve closed the doors on that enterprise and moved to D.C. to start a new joint. At one time there were two Murkys (Murkies?) – one in D.C. and one in Arlington. The move ends the franchise name but the owner will have the new place, Wrecking Ball, up-and-running in D.C. soon enough. What’s interesting about the tale is the follow-on business at the old Murky locale: a coffee shop. One of the reasons Murky is moving, per the owner, is because the funkadelic two-story place they occupy was sold last year and the new rent has become untenable. The folks talking over the new beanery own and operate a place called the Liberty Tavern which is a restaurant bar about 200 feet down the road. The building in located right across the street from the George Mason University School of Law and just blocks from thousands of young, urban professionals who live in the Clarendon district and Ballston area and do very little beyond drink coffee and display their MacBooks. What I don’t get is this: Murky was always full. They made the best coffee east of Reno (Bibo), they had free wireless, the vibe was cool, and all the kids dropped lots of cash. In fact, I don’t even know where the nearest Starbucks was to Murky – it was a challenge too great for even them to unseat. Back to the full part; if the owner decided that rent was too steep for him to stay open then what makes the Liberty folks think they can swing it? Apparently, they want to overhaul the entire building and go from there – something that’s beyond my comprehension. Sure, they may well be able to keep the Murky customers coming back but there isn’t any room for real growth of custom in that building so how are they planning on making it work after an investment (refurbish) that might run up near $100K? Not only that, no matter how good the Liberty Tavern folks are, the coffee won’t be as good. I’ll wager that Starbucks or Caribou are already plotting a move into or near that very corner in Clarendon. I’ll also wager that the new place won’t make it more than a year; mark my words. Business people, I just don’t get them sometimes.

X put out this phrase last night while trying to explain why she’d be an excellent buyer for a woman’s clothing store, “I am very average at many things.” I’ll have her forward the CV if required.

Love to all,

t

blind and naked

Both David Brooks and Andrew Sullivan are missing the boat on the Administration's plans (and hopes). You can find Sullivan's piece here and it will further link you to the Brooks op-ed in the Times. Both are suffering from the great red herring of the here-and-now. What triggers this realization for me are these two paragraphs from the op-ed:

"Obama aides talk about "game-changers." These include improving health information technology, expanding wellness programs, expanding preventive medicine, changing reimbursement policies so hospitals are penalized for poor outcomes and instituting comparative effectiveness measures.

Nearly everybody believes these are good ideas. The first problem is that most experts, with a notable exception of David Cutler of Harvard, donít believe they will produce much in the way of cost savings over the next 10 years. They are expensive to set up and even if they work, it would take a long time for cumulative efficiencies to have much effect. That means that from today until the time President Obama is, say, 60, the U.S. will get no fiscal relief."

I'll call this the "next Monday I stop smoking" plan. Both Sullivan and Brooks believe that having one marshmallow now is better than two marshmallows later. (I know, read this if you must know.) This mentality always put forth the idea that if some program won't happen in the next two years, the next month, or the next week, then it's not worth our effort: and that's the most dangerous of all ideas and it runs rampant through myriad politically-charged issues. If your grand plan doesn't involve where we will be in ten or fifteen years - especially based on our current morass - then you're the problem. The Obama plan is certainly premised on reducing healthcare costs across the board in order to not only fund some of the spending required to support the American economy, but to prevent the spiraling costs from, well, spiraling. The Sullivan commentary even reposts a poorly chosen chunk from Bruce Barlett in order to support something:

"To summarize, we see that taxpayers are on the hook for Social Security and Medicare by these amounts: Social Security, 1.3% of GDP; Medicare part A, 2.8% of GDP; Medicare part B, 2.8% of GDP; and Medicare part D, 1.2% of GDP. This adds up to 8.1% of GDP. Thus federal income taxes for every taxpayer would have to rise by roughly 81% to pay all of the benefits promised by these programs under current law over and above the payroll tax."

I love Sullivan but he's simply circled back on himself by using this example as support for why reducing health costs isn't the solution. If you remove the 1.3% tagged to Social Security, you're left with the larger 6.8% chunk. If those numbers are reduced, and significantly, not only can we avoid increased future outlays but we can start saving now - and by now I mean over the next few years. As usual, the yelling and screaming must have impeded the use of a calculator, something I'll get to in a minute. Where exactly does Sullivan and Brooks think the demand for Medicare dollars come from? I'll wait a second while they think about it. What? Those costs (and percentages) come from...healthcare. Huh? From healthcare needs for those that can't afford it and/or don't have any coverage, or preventive medicine, or good health, or helping those who eat Twinkies everyday. If we don't even consider the future savings - or the resulting spirals that can be avoided we can suddenly go to our calculator powered by silence and get some real numbers. The average GDP (the mysterious GDP from above) from 2006-2008, in 2008 dollars, is about $14 trillion. My handy-dandy calculator tells me that 1% of that number is $140 billion. If we can cut just 2% from the 6.8% of the GDP that accounts for those parts of Medicare then we've can save $280 billion over the course of one year. If we assume that the GDP will grow, maybe slowly for a few years but quickly in the later years, and I can project the current number over six years then I'm sitting at about $1.68 billion in savings by lowering the amount of money spent to unfuck people's health, and the system. That's a big chunk of the TARP, stimulus, and etc. that we've already spent to prop up our addled economy. When you consider future numbers beyond that: possible further percentage cuts, maintaining a lower cost level, and providing better healthcare to everyone, then I'm cool with looking beyond Obama's time. As I've said before, this cat looks and plans way beyond what we imagine: every time. How many times do you need to be fooled?

As for Brooks, who finds savings of $100 million across agencies, or $17 billion in budget cuts to be comical, fuck off. I can look out beyond next Friday and say that if we have sorted out the massive issues we face today by the time Obama is 60, well done. You know, you have to start sometime, right? It's Monday, get onboard.

Why don't you guys just have your one marshmallow and go home.

Thanks.

t

"you'd bitch if you were hung with new rope" - my mother

This interesting little nugget has somehow caught commentators and the public (as if commentators aren’t public) by surprise. During the President’s first complete cabinet meeting he told all his department heads and agency chiefs to cut back spending (or find savings) by a total of $100 million: basically, find some administrative areas they can be more efficient and make them so. Now, I’ll simply point out that there is a massive difference, in monetary value and importance, between the spending programs, budget, and the economic recovery bills so ridiculed as waste by Republicans; and efficiency of an operation or organization. If the military is going to have a budget of x trillion dollars and the big budget cut is going to be the $550 toilet seat then we've got some comedy. But, this $100 million dollars is a matter of streamlining what is required for administration and management for the departments and agencies – nothing more, nothing less. This isn't meant as a move that adds or cuts programs in the big "budgetary" manner – we’re not talking about cutting a fighter aircraft order; we’re talking about saving money on the process that orders the aircraft, see the difference? And it certainly isn’t a pathetic effort or ploy as assessed by Andrew Sullivan or Greg Mankiw. Going back to the $550 toilet seat that everyone hoisted in the air as an embarrassment back whenever that happened: we wanted – we needed – to complain about the $550 in the vein of pure waste, but now we suddenly find it laughable that $100 million in waste can be saved…and someone is willing to do it?

Look, this has been Obama’s character since the campaign. Remember way back when he commented that ensuring that your tires were properly inflated could contribute – along with other programs he sponsored – to increasing mileage and saving energy? Regardless of the fact that it may only increase mileage by 3 -4%, being that we import more than 20% of our oil used for gas/fuel, it’s a nice amount of savings. He’s always been focused on building a process that leads to an end goal and not dicking around with lightning rod tomfoolery. Remember the Clinton and McCain support for the summertime gas tax holiday? He didn’t bite because removing a gas tax for ninety days isn’t any type of fix or leadership, it’s pandering. What he’s building in his administration is the idea that we’ll spend money wisely from the very top down to the smallest agency. If they can spend $100 to do something that an agency has been spending $300 to accomplish then why should we guffaw at them merely because our economy is in the shitter? That’s some really crappy analysis by Sullivan and Mankiw. You know what you could do to make it really funny? You could relate it to a cup of expensive liberal coffee and then it’ll really get a laugh! Hijinks!

How about this one: that funny total of $3 in the average family’s savings over a year would only save you enough money for 10 more rounds of .22 ammunition for your rifle. Man, that is so funny!

Here’s the breakdown: this savings idea is the equivalent, in your household, of buying a plain label brand of NyQuil or plain label pain reliever. It always makes sense; in good times and bad times. We get the same actual ingredients for less money. That is a totally different animal then saying that you can’t afford a $60,000 luxury car and then settling for something in the $55K range. Can I put a percentage savings on the plain label medicine that makes it look funny in relation to a $55,000? I can. If you are saving $4 on medicine but buying a $55,000 car then it’s only a matter of about .007%. That person is such a damn fool.

Buy the NyQuil.

whack jobs

I was listening to some commentary this morning about the various state governors either refusing stimulus money in whole, or wanting to move the money from one program to another. I’m of the opinion that governors probably have a better idea of where their state might need funds but, unfortunately, it becomes a problem when stimulus money is just passed out to folk and they are allowed to do as they please (see: AIG). If a federal stimulus plan is based on the ideals of the administration and congress in charge then it’s going to lead to some gnashing of teeth on programs. Clearly, the Obama plan is to build infrastructure, education, support unemployment benefit pools, and hopefully reassess and support the mortgage market. If, as a governor, you don’t agree with that, so be it – make a rational argument. But if you’re Mark Sanford (S.C.) apparently your input is that the stimulus package will lead to “debt” and “higher taxes” As Seth and Amy might say, really? If you want to push back, not take money, request to move money, or fight for your people….do so, just don’t look like an idiot. How exactly does he think it is going to work? I’ll give Gov. Sanford a story problem: you need $100,000 to get yourself through a year of your life but you only earn $70,000 a year and you can’t sell your house because the market’s for junk. What are you going to do Mr. Man? You either need to bring in more money or you’ll need to borrow. Or, if you’re Mark Sanford, you complain that living with less than you need can’t possibly be remedied if those are the choices. Sanford is nothing but static gumming up the airwaves. The state of South Carolina requires more money than they are bringing in and they’ve got a few choices: cut services, raise taxes, or increase debt. Take your pick as opposed to saying that your choices are cutting services, raising taxes, or increasing debt; that’s actually the question, not the answer. If your state’s unemployment benefit pool is almost empty and you are offered help then you should probably take it. Yes, I understand that the money won’t magically be created down the road; it’ll have to come from higher taxes and it adds to the debt – do you think you’re telling us something we don’t know? And if I may, finally, I’ll add that Sanford is a Republican – a hack Republican, but a Republican, nonetheless – and his party has spent hundreds of billions of dollars that the government didn’t actually have – we also call that debt in the liberal movement. In order to pay back this debt….they cut taxes. What? Let’s see: I ran up my credit card with more than I can afford and I think the best solution might be for me to quit my job and cut my revenues; excellent plan. That’s that, I guess.

On a lighter note; sports fans are nuts. I’m a huge fan of a number of teams – most don’t win many championships – but I don’t think that I ever get completely thrown off my rocker. Some of the Capitals fans who “contribute” to the blog at the WaPo are seriously crazed people. (The Caps have had a very uneven start to the month.) I actually think there are old coots out there who think they should win every, single game – it’s mind-numbing. Maybe I just shouldn’t read the blog; there’s a solution.

My cat, even though already demanding more than is necessary, has decided to actually speak to me when she wants her pets. She used to just climb up on my lap but suddenly she’s taken to making noise prior to arrival and attacking my hand with the top of her pretty little head. I didn’t ask for any of this…

sonar love

Here’s a little grammar discussion to lighten the mood. It seems like I’m forever trying to sort out the ‘I and me’ conundrum and it never sticks. I guess me should hang around those who are dubbed ‘mavens’.

I heard an interesting interview on NPR this morning (the podcast is better than the written article) that looked at our current economic troubles and measured them against Japan’s in the 1990s. Since there aren’t many economic wonks around the Hilltop I’m not sure how strong the support is for the points put forth but they are intriguing. I would hope that if there’s a working, breathing example of what we’re experiencing, someone would grab it by the scruff of the neck and take a good, long look at it. The gist seems to be that if private spending disappears (in Japan the interest rates were lowered from 8% to zero in an attempt to bolster private money movement, but to no avail) something or somebody needs to step in and fill the void. The obvious, and only, choice is the government but this leads to more debt; and isn’t it rich that the word debt just scares the bejeezus out of people? In Japan, the government infused some money but just as quickly backed off due to the debt burden; they tried again, and again, and again over time but the false starts and intermittent chunks of cash probably did more harm than good. The problem, and theory of repair, is called balance sheet recession and the goals when clawing out of the hole is to keep the GDP up and unemployment down until there’s an end in sight. What happens is the government spends enough to keep the economy from collapsing – not necessarily growing – and takes on debt while the private sector struggles to get back on balance. Once the private sector gets its house in order then it takes over the spending and growth responsibility while the government backs off and starts to repay the increased debt. The great fear we all have is that the spending will happen but later on down the road the government won’t actually make the switch of payments and we’ll end up with lots of debt, tons of useless furniture, and we’ll slip underwater again.

I just realized that grammar isn’t really light discussion, is it? I’m showing my dorkapotomus colors. This one actually is light and funny and might help you get through the final hours of the day. I’ll tell you right up front that when I used to watch SuperFriends on Saturday mornings back in the 70s, my favorite superhero was….oh, nevermind. I feel used.



T

I want my two dollars!

Here’s the opening of the article at CNN:

(CNN) -- On Monday, Congressional Republican leaders put out a list of what they call wasteful provisions in the Senate version of the nearly $900 billion stimulus bill that is being debated:

The Senate is currently debating the nearly $900 billion economic stimulus bill.

Here is the list of wasteful provisions they came up with in the release. I’ve added my earth-shattering remarks after each.

$2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.

- Oh, earmark! There’s a catchphrase. I’d like to see a review of the Bush administration’s DoE report. I will say that this is based purely on my hatred of Bush, I won’t lie. In my defense, haven’t the conservatives been pushing the idea of “clean coal”? Suddenly, any hope of making coal clean(er) is mockable?

$246 million tax break for Hollywood movie producers to buy motion picture film.

- What is this? I think this little nugget simply mists our vision (along with the earmark comment above) before reading the rest of the list. Once you read this you immediately thing “What the hell is going on.” I would imagine that this $246m is questionable at best.

$650 million for the digital television converter box coupon program.

- Shoot, I don’t know who came up with the converter box program but it’s there and it’s not going away. When you suddenly get millions of American homes with no TV in a few weeks you are going to have a riot on your hands. That doesn’t mean I think it belongs in the package, I’m just donning my riot gear.

$88 million for the Coast Guard to design a new polar icebreaker (arctic ship).

- I don’t know if this icebreaker (the “artic ship” wasn’t needed to clarify) will be used for scientific research but I’m guessing it has some value in that area. I wouldn’t call it wasteful.

$448 million for constructing the Department of Homeland Security headquarters.

- Is this one of those “shovel ready” projects? If so, it’ll certainly boost the economy in the D.C. area (I think it’s planned for SE) and provide jobs, right? Based on what I’ve heard from just about every economist on the spectrum, it is the jobs and unemployment that need to be solidified before anything else turns around. Now, we may not need a new HQ and that would certainly be an issue.

$248 million for furniture at the new Homeland Security headquarters.

- Hmm. Let’s call this wasteful spending. I think that if your furniture costs more than half the price tag of your new building then you’re doing something wrong. Imagine building a million-dollar home and then spending $600K on furniture.

$600 million to buy hybrid vehicles for federal employees.

- They make this sound like we are buying 30,000 Priui and handing them out to employees. Opa! How about it probably being a buying program for fleet vehicles for federal employees? Again, spending and responsibility….I hate that!

$400 million for the Centers for Disease Control to screen and prevent STD's.

- Fuck health. Sorry. I think every penny we spend on preventive healthcare comes back tenfold in the end. I think my father might have better numbers on that…and I apologize for the profanity.

$1.4 billion for rural waste disposal programs.

- Fuck waste. Oops. Okay, I’m pretty sure we need waste disposal, right? Once again we are in the spending area where it provides jobs and economic lift.

$125 million for the Washington sewer system.

- Well, the federal government is responsible for a good bit of the D.C. funding, it being a federal city and all. And, if you don’t know, there must be at least a dozen water main or sewer bursts in D.C. every week in the winter. Employment? Spending? I’m cool with it.

$150 million for Smithsonian museum facilities.

- Tourism. Tourism. Tourism. Let me put it this way: isn’t tourism one of the huge economic boosts for just about any major city, and by default, the economy. Secondly, if you’ve been to D.C. and enjoyed the Smithsonian, gratis, then think about coming here with the family of five and paying $10 for every Smithsonian building you want to see. Before you know it, you’ll be into museum costs to the tune of about $600 for the week. Don’t worry, you can eat Ramen in your hotel room.

$1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.

- Doesn’t the taking of the Census employ loads of people? We’ll have none of that! Doesn’t the Census affect elections and voting districts? Isn’t it important?

$75 million for "smoking cessation activities."

- See healthcare above.

$200 million for public computer centers at community colleges.

- And the problem here is what? Education? Learning? Kids and adults trying to better themselves and enhance the economy and our standing in the world? Shenanigans!

$75 million for salaries of employees at the FBI.

- They make this sound like it’s merely a raise for everyone there. That’s not it, right? Are we hiring more people in law enforcement? That’s crazy.

$25 million for tribal alcohol and substance abuse reduction.

- Beating a drum.

$500 million for flood reduction projects on the Mississippi River.

- I have two things to say here and they are both pretty straightforward: JOBS and KATRINA.

$10 million to inspect canals in urban areas.

- I’ll go along with more jobs here. I’m guessing there are plans on the books to catch up on infrastructure projects that have been put on hold.

$6 billion to turn federal buildings into "green" buildings.

- I think the Republicans thought this meant green paint. With the quote marks it really does seem sneaky: do they mean non-green buildings? Liberals. I think the work involved would be an economic boon and the feds really need to get buildings upgraded.

$500 million for state and local fire stations.

- Let the fuckers burn. And screw the police, too.

$650 million for wildland fire management on forest service lands.

- This is in here simply because they are Republicans. They couldn’t allow this to stand.

$1.2 billion for "youth activities," including youth summer job programs.

- I’ll again defer to my father’s opinion from my youth. He felt that kids should have work opportunities in the summers. Let me ask you this; if we were to put $500 million in the pockets of youth through a summer jobs program, do you think they would spend it? On what? They can’t be serious with this objection.

$88 million for renovating the headquarters of the Public Health Service.

- Again, I know the feds need some remodeling but some of the plans may need to be put on hold, especially when it comes to new buildings.

$412 million for CDC buildings and property.

- Disease has been eradicated. Get rid of the CDC!

$500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.

- See above. (I have a good friend who’s a chemist at NIH and I know her lab is a piece of junk.)

$160 million for "paid volunteers" at the Corporation for National and Community Service.

- Well, anyone involved in community service or as a community organizer clearly has no future.

$5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.

- More energy efficiency. Can we get off this? Drill, baby, drill.

$850 million for Amtrak.

- The only thing I’ll say here is public transport. If you don’t live on in the Northeast or along the seaboard you don’t know how important Amtrak is for reducing traffic. Having said that, isn’t Amtrak one of the worst run organizations in the country? Or am I making that up?

$100 million for reducing the hazard of lead-based paint.

- Lead is a problem?

$75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.

- I’ll take their word that there are other facilities for the training…with this caveat: since the conservatives have been hell bent on scaring the living shit out of everyone for the last eight years isn’t this a bit rich?

$110 million to the Farm Service Agency to upgrade computer systems.

- I don’t know anything about this. Nor do I have anything witty to say.

$200 million in funding for the lease of alternative energy vehicles for use on military installations.

- I know the military and they need some energy efficiency.

I think I’d probably question and/or remove about 5 or 6 billion of these “wasteful initiatives”. My calculator runs that out to two-thirds of one percent of the proposed $900 billion. Is the package perfect? Nope. Is it worth bickering over what would amount to about $23 of my monthly take home pay? Nope. But once you open up with words like earmark and Hollywood, you're golden. Hollywood, gay liberals!

If they want to simply pose and blow smoke up our skirts then they've done a fine job. But don’t pretend that all this evil stuff is being thrust upon us. Do you see any repairs being done to Ted Stevens' house, nope. You know what? I don’t want any stimulus package that is spending nearly a trillion dollars of taxpayer money. But aren't these the same politicos that voted for, and released, $350 billion of the first package and have nothing to show for it?

That barn door needs closing.

slapshot

Friedman nails it today in words better than I could manage. Since I believe the only way forward for American auto companies is to undertake a serious overhaul – this would have been a grand idea for them to latch onto way back when – this op-ed finally blasts the big, bright light across just how horrible an idea this cash injection/loan is unless the industry provides the necessary mea culpa. Buying typewriters and record albums, that’s brilliant.

The Caps are back in D.C. tonight to take on the Bruins at Verizon Center. My pal Buzz has once again managed to show up for “work” during a Capitals home stand – suspicious? Just so you know, and I know you’re interested , NHL teams carry 23 players on their active roster and as of this morning the Caps have eight of the opening-day players out with injury – and they’ve been out for mostly 12-14 games. The fact that they’ve cobbled together a team made up of one-third minor leaguers recalled from Hershey, and remained in first place, is quite a feat. Hopefully, everyone’s back by the New Year and they can get on a roll through the spring.

One more NYTimes piece today – an art/coffee love affair story. Blueberry bagels…genius.

I also don’t think it’s a good day for you, Mr. Governor, when you have Patrick Fitzgerald all in your business. Having Patrick Fitzgerald showing up to “ask around” is like having Christiane Amanpour show up to do “some reporting” from your village. “What is Christiane Amanpour doing here?”

Love to all

t

can you spare $5?

This whole economic mess involving mortgages, from the point of view of the homeowners, the banks that bought the chicken parts or the original financing companies, became much clearer while I was sitting on the couch last night catching up on the NY Times. I read the paper, I watch debates, I follow what’s what online, I’m pretty well informed – but very few articles have been able to condense any of the issues into such a well-defined set of paragraphs. As the bailout package sits on the back porch doing jack-all we have yet to hear anyone inside the Beltway explain what happened within the markets; what brought about the problems we have and/or why it spun out of control. I’ll worry about the solution on another day. Here’s the NY Times staff editorial that made me call out “what the hell is up with tranching and CMOs?” I didn’t actually think or say that but I did some layman’s research on how this crap works and it doesn’t take a rocket scientist – or economic wonk – to see how fiendishly the system was manipulated. Let’s simplify. I’ve got some money that I want to lend. Not only am I gagging to dole it out but I’ve found some folk over in the District who will are willing to buy these loans after I’ve done the legwork – and it’s for enough money that I’ll turn a profit and be done with worrying about deadbeat loan takers while they get to lap up even more money. I gather up my some of my pals – a few are good with money, a few are bad – and I hook them up with some loans: money here, money there. Let’s say I end up loaning money to ten friend, five of which are the type that either never pay back my money, never buy a round at the bar, or simply don’t have the means to ever pay me back. In fact, in my normal day-to-day relationship with them I’d never expect the money to come back, I’d think it a gift. I give them each $1,000 at interest that would return me something like $1,216 from each of them over four years (that’s 4% compounded over 48 months). This little package of gold would be worth, if every one pays me back, about $12,150 in the end. Of course, I know that the chances of my five loser friends paying me back are nil so the profit isn’t really going to be that $2,150. Fortunately, I have a plan. Remember those big money investors in the district? I’m going to sell all $10,000 worth of loans to them for $11,000 and they get to keep that extra $1,250 that will (no doubt!) come flooding in when the loans are paid back. I take my $1,000 for doing the work and head to Verizon Center for a Caps game and a few beers. The next day, I find ten more folks to play my game…ten more the next day….ten more the next day. I’m working five days a week handing out $1,000 loans to any one who can sign their name and I’m making $20,000 month with no risk because I don’t care about collecting these loans – I just sell them on to my sugar daddies in the District who are making (at least on the books or in their minds) about 25% more than I. Free fucking money all around! Yes! Of course, my five loser friends from my Monday transactions aren’t going to pay back the money they owe…ever. The first five good friends pay back their money – about $6,000 – and the other chuckleheads each manage about $500 ($2,500 total) before moving to California and starting medical marijuana farms. My pals in D.C. now have $8,500 on the table to cover the $11,000 they paid me for this “bundle” of loans. I’m going to guess that a 23% loss on that 11K investment isn’t going to go over too well in the boardroom. If they were losing that much on my Monday transaction just wait until my Wednesday crew’s payments dry up. How about six months from now when I’m just signing up folks standing on the platform at Ballston station. Shoot, six months into this escapade I’ve made about $120,000 by just selling all this bad paper to the folks in the golden city who think they’ll make $250,000 on my work. The problem is that I’ll be keeping my money because I won’t be standing near the inferno when the match is lit and the loans go up in a blaze of glory. The loans they paid $120K for will be worth something less than $100K and their little operation goes under.

There’s some math in there but there isn’t much economic instruction required. Is it a very simple example of how the mortgage crisis went to crap? Yes. Is that what was happening? Yup. No one ever imagined that the house of cards would collapse – it’s the Black Swan syndrome. When we look at it now it seems comical that the “smartest guys in the room” would continue to operate while jumping up and down for joy on what was clearly a shallow mooring. But you know what? What I really hate, and what the Times editorial made salient, it this: the ones giving out the loans knew those loans would probably never be paid back. They didn’t care because once they sold them along to another “investor” they were clear of the problem. They were deliberately deceiving both sides in an unregulated market; not only screwing the home buyers, who aren’t totally innocent in this debacle, they were screwing the investors (also not innocents). Picture someone walking into a bar and sucker punching two dudes in the face and then walking away while they mistakenly fight each other. What a fucking bastard.

And so ends Todd’s economic firestorm.

Have a nice day.

spare change?

I remember taking both macro and micro economics during my foray at the University of Iowa: I hated them both, but for different reasons. All you need to know about my micro economics class was that it was in the basement of a very old university building at 7:30am two days a week.

"When we add an additional trillion dollars to the debt, the burden of the taxpayer, sooner or later there's got to be a reckoning," said Sen. Richard Shelby (R-Ala), ranking member on the Senate Banking Committee.

I’m onboard with Sen. Selby – and I think I’ve seen him during various hearings and no doubt laughed at his generally horrible behavior. I’m only letting him participate in this entry because he has said it best. Not only that, remember last month when Freddie and Fannie were in “trouble” and the government passed a bill that only authorized a government takeover “if” it was needed for the two mortgage giants? Everyone pretended that authorizing the use of force was not the same as actually saying you could use force. Wait, wrong fuck up. What they said was it was only an authorization to move further into Freddie and Fannie if needed. No worries they said, it won’t be needed. I could be forgiven for thinking that we were reckoning this out six weeks ago but there’s no way that authorization wasn’t going to be used. Shoot, if they send me a credit card with a $20,000 limit there’s no way I’d actually use it, right?

What we’ve got now is another reckoning. In the most basic economic terms I can sort out, it comes down to a proposed ~$700 billion Treasury buyout of mortgage and mortgage-related failing investments. The breadth of the buyout is limited to Wall St. banks and corporations and not specifically to individual buyers and mortgage holders – call them ‘the people’. Sec. of the Treasury Paulson wants a quick and clean move to get this rolling line of credit up and running. Some in the Congress, on both sides of the aisle, appear to be pushing back against a straight, uninhibited, no oversight, limited control, three-quarter of a trillion dollar check. For differing reasons (the fighting Republicans dismiss it as a bailout; the fighting Democrats want more oversight and more help for ‘the people’) I think it’s probably a solid idea to hold off and take the time to bang more heads together until there’s a much more solid piece of work. I see how desperate everyone on the Hill seems to be but why is it that suddenly, beginning on a Friday afternoon and carrying through Sunday meetings, did everyone decide that we were in a 60-hour time warp where we’d just discovered the problem? Wasn’t it clear over two years ago that the housing and mortgage sector was collapsing? Haven’t I listened to endless talking heads discussing whether or not we were in a recession yet because the official term ‘recession’ can’t be used until two consecutive quarters of a crappy economy have happened? What worries me most about Paulson in particular is what the hell has he been doing since he was appointed? It looks like he’s been sitting in his office playing minesweeper and watering the plants. Imagine someone who actually was taking steps as the problems arose and attempting to sort out solutions in a serial manner. Instead we get everyone running around over a weekend with their hair on fire as if this was all a surprise.

You know what? I don’t have the solution. I know that’s pretty obvious. But…I’m not paid to have the solution. If you want me to kick some ass on PowerPoint, I’m your man. I’m all for the reckoning that’s coming and I know it’s going to hurt…a lot. This is an opportunity while we’re standing in dire straits for someone to come out and say the words I long to hear, “This son of a bitch is going to hurt for a good long time. You might need to lock down that seatbelt and get ready for a rough, rough ride.” And I want them to mean it. I want them to quite blowing smoke up my skirt. We aren’t children.

And the next time a pile of politicians come out for a press junket and stand line abreast like they’re a stern and supportive looking YMCA basketball team, I’m going to kick them all in their shins. Nothing says “we’re so confused and useless” then a flight of unblinking, alleged leaders.

Ah. Monday.

t

what? us? can't be

There’s an op-ed by Martin Neil Baily in the Sunday Times that’s an attempt to separate the economic issues in America from the war in Iraq. The opening paragraphs put forth his theory that global demand for all commodities is driving increased in prices and cost-of-living – particularly oil and metals. The global demand for resources combined with our mortgage and construction felonies are the primary contributors to the economic mess. He debunks the war, the actions of the Fed, government borrowing, budget deficits, or foreign investment temptation (?). I could sit together with Bialy at a table that disassociates the economic mess from the war – but not fully. I think there are quite a few out there who would think that the distraction of the war, the blinkered focus on the ‘global war’, has either allowed the American economy to slip out the backdoor or it represents the only activity our government (which includes both the executive and the legislative) is capable of participating in – no multi-tasking in Washington. Bialy’s point-of-view seems shallow if the only real suspect in our economic problems is global demand and the mortgage crisis. In fact, if I take him at value then our inability to deal with shrinking supply (or at least recognize that it was coming) and the housing market is a little embarrassing. How about if we just imagine there was no war – now what’s the excuse? Hey, China and India have a whole lot of people? We shouldn’t necessarily leave the housing market unregulated? One man’s opinon.

Speaking of the Administration…remember the “bring it on” quote from the President? I think Sec. Rice might want to consider issuing challenges to those who control and affect events in Iraq. According the an AP article in the Washington Post, Sec. Rice decided it was best to call out Al-Sadr during her visit to Iraq. In fact, her saying “I guess it’s all-out war for anybody but him. I guess that’s the message: His followers can go to their deaths and he’s in Iran.” I won’t even attempt to break that message down into it’s ironic components.

return of the king

18 January 2008
Riverwalk, Reno, Nevada

Another trip back in time this week; another chance to see how Northern Nevada is doing in my absence. I'll give the quick rundown on my old river rabbit trail:

La Bussola - they've reopened back downtown after almost a year in a very small space elsewhere. The old landlords quadrupled the rent and they bailed out in 2006. They are now about 50 feet across from the old shop (which is still vacant) and in the same building where they live. Great news for them. They are hosting a 300+ soiree this evening to celebrate the launch of a new gay Website that will be hosted, and specific to, the Reno crowd. I may swing by...
Dharma Books - They're still going strong on the river and have closed the second location. Cheron is suppose to be in Tucson finishing her novel but she's still sitting behind the desk doing books as I type. I love the place.
Bibo Coffee - Still the best brew in town and opening a second location closer to the river.
Pneumatic Diner - Two evening meals this week and still great; still on my 'best of' list.

For those worried about the housing market I've got a little input on the leading indicator market in NNevada: there were 400 homes listed for sale in Fernley during December and 11 sold. It's ugly. The Sacramento median price for homes dropped 20% from December 2006 to December 2007. I thought my earlier predication of 2010 for the nation was frightening but I'll stick with it based on what I'm seeing out here.

Speaking of economics, what's the bruhaha with "immediate relief" to the American people? Remember the days when 'they' said Americans aren't saving money and are failing to plan for the future? 'member? Our spending culture, of which I am a proud member, was setting us up for some Monday when the money would be gone. Now we've got Bernanke and Bush contemplating a $800 to $1600 per family/person package that "gets money in the hands of Americans"....for what? They say it's so they can spend it and get the economy back on track. I'm no economist but I think this might be the stupidest thing I've ever heard - give us money so we can spend it. That's the plan for temporary relief? Yikes.

The Nevada caucus is tomorrow in the AM so candidates and politicos are swarming the city. They all look a little crazed.

I saw an Oregon license plate this morning in the hotel parking lot that was something that states now provide for owners to use as an indicator of person's love or support. This one was "Salmon". Nothing more. Just the word "Salmon" and a subdued picture of a salmon - I don't know if it was a coho or king but it was definitely a salmon. Since there was no other indication of intent - save the salmon, eat the salmon, catch-and-release the salmon - I've no idea of the context. I know that here in Nevada they have "support Nevada Arts", "Keep Tahoe Blue", the standard "University of Nevada", and myriad others, but I've not seen something so ethereal as "Salmon".

I'm thinking of a movie this afternoon - Juno is playing right nearby but There Will Be Blood is also opening here this evening. Any input is appreciated.

I'll be back home tomorrow evening.

Love to all.

t.

i shot a man....

During my rounds of Reno and greater Northern Nevada the whole real estate crisis become oh so clear. I'll get to that is a few minutes.

Here is the oath that every commissioned officer takes upon entering the military, I've added in a name for clarity:

"I, Ricardo S. Sanchez, do solemnly swear, (or affirm), that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God." (Note that the last sentence is not required to be said if the speaker has a personal or moral objection)

Seems clear enough, doesn’t it? The oath of enlistment is a bit different in that there’s allegiance to the President, the Uniform Code of Military Justice, and the officers appointed over us/them/we. I only took it four times. Anyway, there are tons of people out there, Mr. Sanchez and various other retired generals, who apparently believe that stars on their shoulders, political expediency, and marching behind a President was part of their job description. It's either that, or he was too afraid to make a stand and tell the truth - I've no idea which is worse. He was no doubt afraid they'd treat him as that did Eric Shinseki when he testified by telling the truth. Somewhere in his mind he thinks that his belated confession (and future book) will somehow exonerate him from responsibility; even greater reason to doubt his sanity. I sure hope Sanchez sleeps well at night. Well done, General - keep up with the Japanese spiritual quotes.

On to Reno. When I moved there in 2003 the entire area was busting at the seams - real estate prices skyrocketing along with a severe housing shortage even with the eye-popping building of endless subdivisions. All of Nevada led the early 2000s boom, at least two or three years ahead of the rest of the country, and I got in just as things began to fever pitch. When I put my house on the market in the spring of 2005 I was about two months too late. It sat empty for a year and I had to lower the asking price by $40,000 and pay the buyer's closing costs just to sell - but I got out just in time. That was summer of 2006 and the market is far worse now than it was then. The city of Fernley is swapped with empty homes for sale and rent. Prices have plummeted – 2400 sq. ft homes are now selling for the 2006 price of my 1500 sq. ft house. Downtown Reno has empty condos and townhomes in beautiful new buildings on the river. It’s ugly. My real estate prediction is this: Reno is at least a year away from riding out the problem. Consider the collapse as starting in spring 2005 and I can see it will last until at least the fall of 2008: count that as a run of 3 ½ years. For the rest of the country; it didn’t get real bad until spring/summer 2007 so the end will be nearer the end of 2010. Those are the facts on the ground – don’t believe anything you read from economists and real estate associations.

Such light discussion today.

I’ll get off my rantings and railings…

T.